Climate change, geography and trade agreements: A perspective of Asian bilateral trade

PLOS One | https://doi.org/10.1371/journal.pone.0320363 April 25, 2025 10 / 23 PLOS One Trade agreement, climate change and geography declined below the export level and significantly increased under FE and RE. Comparatively, the importing’ log of CO2 is a positive inclination factor for bilateral export levels except under OLS. CO2 has a high magnitude for importing countries than exporting countries. Both coun- tries substantially contribute to determining bilateral exports. Subsequently, physical distance is found to be a statistically significant factor with high magnitudes. Geographic factors from exporting countries have a greater impact than importing countries. The findings show that geographic factors for exporting countries influenced bilateral exports by 72.2% more than importing countries. By controlling the country-specific effect, bilateral exports are increased by 22.6% because of the margin of countries. Therefore, domestic physical distance has a stronger effect than physical distance and CO2. The author [85,86] found that the firm’s deci- sions about movement are made based on the specific location where high demand market size exists after decreasing transportation costs. Supplementary natural geographic factors, such as access to the ocean and common bor- ders, significantly influence the export level. Bilateral exports are enhanced because of a high contribution of access to the ocean from the importing country’s countryside, resulting in high magnitudes. Countries that have access to the ocean benefit during trading of products

through air infrastructure. However, exporter geographical countries are also geographically benefitting because they have a common border. Having a common border reduces trade costs through bilateral infrastructure [67]. The outcomes from PPML indicate that explan- atory variables have remarkable impact on exports. The estimation is consistent rather than traditional OLS, fixed and random effect. The reason behind that this technique incorporates the zero trade issues in bilateral exports. More precisely, some trading partners do not report or trade between each other such as Pakistan and Israel due to diplomatic conflicts. Thus, zero trade issues is occurred. Empirical evidence shows that a 1% increase in CO2 upsurges exports by 10.2%. The reason may behind that extreme weather stimulates production of dissimi- lar products, which are transported from/to multiple locations based on environment. The coefficient of distance is negatively correlated with exports, 76.2% decrease in exports is due to a one-unit change in distance. Likewise, rest of the trade barriers are also found negative correlated with exports and statistically significant at 1% and 5% levels. Our main concern is the simultaneous impact of geographic factors on bilateral exports, reported in Table 4. We perform a two-stage sample selection [37]. Columns (1)–(4) indicate domestic geographic estimates, whereas Columns (5)–(8) indicate importing geographic estimates. Table 2. Central Tendency. Variable Obs Mean S.D Min Max Exports 44436 6.045 6.774 3.000 8.210

Distance 44436 3.612 3.366 1.856 4.040 Tariff 44436 0.892 0.753 -1.523 1.574 Access to Ocean 44436 0.215 0.312 0.000 1.000 Common border 44436 0.248 0.305 0.000 1.000 CO2 44436 5.505 6.029 2.208 7.013 Population 44436 7.960 8.412 5.458 9.143 GDP 44436 11.601 12.076 6.909 13.049 PTA 44436 0.210 0.012 0.000 1.000 WTOX 44436 0.010 0.032 0.000 1.000 Note: all variables are transferred into logarithm. https://doi.org/10.1371/journal.pone.0320363.t002